Friday, August 1, 2014

A Tale Of Two Middle Classes And Globalization

Globalization has been good for the middle class in many parts of Asia.  Their incomes have improved substantially as a result of globalization in absolute terms, but they still have a long way to go relative to the middle class in rich Western nations.  Unfortunately, there has been little growth in middle class incomes in rich nations like the US, Germany and Japan during since the onset of rapid globalization in the 1980's.  Most of the income growth in rich nations has gone to those at the top of the economic pyramid.  They have become disinterested in economic growth rates since they do not benefit from it.

There are two bad scenarios that follow from the tale of two middle classes:  We can have plutocracy and globalization, or we can have populism and a reversal of globalization in rich nations.  We need an alternative to "Hobson's choice".

One alternative to is to redistribute income to the middle class in rich countries.  A better alternative, according to this article, would be larger investments in public goods in rich countries.  The question is whether either of these alternatives is politically possible in rich countries.  Globalization and democracy may be the victims of political inaction in rich nations that have ceded political control to the super rich.

No comments:

Post a Comment